Historical Pattern From 2017 Signals Bitcoin Price Crash To $35,000

Overview

Bitcoin appears to be entering a deeper correction phase, with technical analysis indicating that it may be repeating patterns observed in previous market cycles from 2017 and 2021. A notable analysis suggests that if this pattern holds, Bitcoin could experience a significant decline, potentially reaching a price as low as $35,000 in the near future.

Bitcoin’s Historical Patterns

According to a technical analysis shared on social media platform X by the crypto analyst Chiefy, Bitcoin’s current price movements are reminiscent of the macro structures seen after the market tops in 2017 and 2021. Chiefy compared three significant price peaks: the high of $21,000 in 2017, the peak of $69,000 in 2021, and the recent all-time high just above $126,000.

In both the earlier cycles, Bitcoin underwent severe retracements exceeding 70% before settling into long-term bottoms. After breaking above $21,000 in 2017, Bitcoin experienced an 84% decline during the subsequent bear market. Similarly, following the $69,000 peak in 2021, the price dropped by approximately 77%. Chiefy noted that the fractal alignment of these price movements is nearly perfect, suggesting that the market might be on the verge of another capitulation phase akin to those seen in previous cycles.

The current correction, which started from the recent peak of $126,000, is beginning to mirror the downturn structures of earlier cycles. If Bitcoin follows the same trajectory and experiences a similar percentage drop, the projections suggest a potential price range between $30,000 and $35,000. The analyst cautioned that such a decline could occur within a short timeframe if the historical pattern continues to unfold.

Weak Demand and Increased Whale Activity

Adding to the bearish sentiment surrounding Bitcoin are indicators of weak demand for Bitcoin and Ethereum spot exchange-traded funds (ETFs). On-chain data from Glassnode indicates that the 30-day simple moving average of net flows for these ETFs has been negative for most of the last 90 days, indicating a lack of demand strong enough to counteract ongoing selling pressure.

In a related observation, the Whale Inflow Signal metric from CryptoQuant shows a significant increase in the average monthly inflows of Bitcoin to Binance from large investors, or whales, as the price of Bitcoin fell from $95,000 to $60,000. Inflows surged from approximately 1,000 BTC in late January to nearly 3,000 BTC in February, with a notable spike of around 12,000 BTC recorded on February 6 alone. Furthermore, there were seven trading days since February 1 where daily inflows exceeded 5,000 BTC. This trend of rising inflows to exchanges from large Bitcoin holders signals increased selling pressure, which has likely contributed to the ongoing price decline.

At the time of this analysis, Bitcoin is trading at $66,015, reflecting a decrease of 1.7% over the past 24 hours.

From author

The current analysis of Bitcoin’s price action highlights the importance of historical patterns in understanding market dynamics. The comparison to previous cycles suggests a cautious outlook as investors grapple with potential further declines. The interplay between technical analysis, market sentiment, and whale activity creates a complex environment that requires close monitoring.

Impact on the crypto market

• The potential for Bitcoin to drop to $35,000 could lead to increased volatility in the broader cryptocurrency market.
• Weak demand for Bitcoin and Ethereum ETFs may deter new investments, further exacerbating bearish trends.
• Increased whale activity indicates a shift in market sentiment, with large holders potentially contributing to selling pressure.
• The historical patterns observed may influence trader psychology and market strategies, leading to a more cautious approach.
• The current price movements could affect altcoins and other cryptocurrencies, as market correlations often lead to broader impacts across the sector.